How to Save for Your Child’s Education with a 529 Plan

Every parent desires to safeguard the fact that their child gets the best education possible as it is the key toward a successful life ahead. However, as the cost of education is skyrocketing which adds pressure on parents but investing in a child education plan can ease this burden substantially.

Like other forms of investments like mutual funds, stocks, or even insurance policies a child education plan can help parents start saving well in advance. This article talks about all the essential details that one needs to know about education plans.

Why is a Child Education Plan Important?

The way one saves towards a retirement plan to secure one’s financial security at the time of retirement, a child education plan helps parents save for the child’s education well in advance.

When it comes to children, it is always taken for granted that parents or guardians will take care of all of their needs. However, in the event of unforeseen events the child might not receive the education or future that the parents envisioned.

For this reason, it is all the more important that parents invested in a child education plan early on putting away some money every month. At the time of maturity, the funds will be adequate to let the child select the college or university he or she wants to attend without having to worry about the finances.

What are the Types of Child Education Plan?

There are a number of child education plan that parents can choose from. The plans can be selected based on amount of investment or the period of investment.

Insurance firms offer different child education plan with an investment element added to it. The dates and the amounts for the investment can be decided by the parent or guardian.

What are the Insurance Child Education Plan Available?

There are two main types of insurance child education plan available:

  • Regular premium plan
  • Single premium plan

A regular premium plan is designed such that parents can pay premiums till the child turns 18 and the amount paid is paid out over the years. In the event of the death of the parents before the maturity of the policy then the assured sum is given when the child attains the age of 18.

However, in the case of a single premium plan a single payment is made and it is returned after it attains maturity.

What are Unit-Linked Child Plans?

Unit-linked Child Plans offer a number of benefits to the account holder for a child education plan that are as follows:

  • High returns
  • Flexible withdrawals
  • Value appreciation
  • Suitable cover

What is a Money Back Child Plan?

This is another child education plan that parents can take up as it helps one effectively plan the payments to be made. The objective of this plan is to keep the financial goal in sight and work towards achieving it and they have a regular income option as well.

What is an Endowment Child Plan?

Endowment child plan is both an insurance and investment plan. The investment part is taken care of by paying the premiums and this activates the insurance.

An amount is guaranteed when the endowment period ends. Also, this is an excellent savings option to secure the child’s future.

What are the Benefits of a Child Education Plan?

There are several benefits of saving in a child education plan. Some of the benefits include:

  • Provision of school fees
  • Funding child’s interests
  • Higher learning
  • Meeting unstable market

The child education plan can help parents foot the bill for school fees. Also, if the child is interested in attending a summer camp or an educational trip abroad this child education plan can be utilized to provide funds for this without burning a hole in the parent’s pocket.

The foremost objective why parents save is a child education plan is towards higher education. The child can choose the field of study and the university that he or she would like to attend in India or abroad.

Investing in a child education plan is a smart move and timely investments can help grow this fund. The higher the returns, the more tension and stress free it will be for the parents.

What are Some of the Options Available?

Some of the child education plan options that are available include:

  • Max Life Shiksha Plan: It is a unit-linked non-participating education plan that provides maturity, death, loyalty benefits.
  • SBI Life Smart Scholar: It is a unit-linked non-participating education plan that provides insurance and investment.
  • Aviva Young Scholar Advantage Plan: It is a unit-linked non-participating education plan that provides market investment to create wealth.
  • MetLife College Plan: It is a non-linked deferred participation endowment plan that provides protection and savings.

There are so many child education plans that are on offer and parents should consider investing in one. This investment has the power to help your child reach for the stars and make their dreams come true.